The t(8;21) rearrangement, which creates the AML1-ETO fusion protein, represents the most common chromosomal translocation in acute myeloid leukemia (AML). Clinical data suggest that CBL mutations are a frequent event in t(8;21) AML, but the role of CBL in AML1-ETO-induced leukemia has not been investigated. In this study, we demonstrate that CBL mutations collaborate with AML1-ETO to expand human CD34+ cells both in vitro and in a xenograft model. CBL depletion by shRNA also promotes the growth of AML1-ETO cells, demonstrating the inhibitory function of endogenous CBL in t(8;21) AML. Mechanistically, loss of CBL function confers hyper-responsiveness to thrombopoietin and enhances STAT5/AKT/ERK/Src signaling in AML1-ETO cells. Interestingly, we found the protein tyrosine phosphatase UBASH3B/Sts-1, which is known to inhibit CBL function, is upregulated by AML1-ETO through transcriptional and miR-9-mediated regulation. UBASH3B/Sts-1 depletion induces an aberrant pattern of CBL phosphorylation and impairs proliferation in AML1-ETO cells. The growth inhibition caused by UBASH3B/Sts-1 depletion can be rescued by ectopic expression of CBL mutants, suggesting that UBASH3B/Sts-1 supports the growth of AML1-ETO cells partly through modulation of CBL function. Our study reveals a role of CBL in restricting myeloid proliferation of human AML1-ETO-induced leukemia, and identifies UBASH3B/Sts-1 as a potential target for pharmaceutical intervention.